I read somewhere (can’t remember where, otherwise I’d provide attribution), that money can be seen as a language. When you spend money you are expressing your preferences, indicating the thing you are purchasing has value to you. Every dollar or euro you spend gives its recipient the message that what he has on offer is worth the amount you are willing to pay. The economy, then, can be seen as a vast communications network of sorts, buyers telling sellers what goods they want produced, and sellers modifying, matching and adapting those goods based on the information received. Just as a good language facilitates the possibility of clear understanding between speakers, a good money allows for well-allocated goods and services in society based on the preferences of its citizens.
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In the Book of Genesis, The Tower Of Babel was a project to build a great monument to reach the heavens, but the Old Testament God didn’t want it to succeed. He observed that, given a common language, man could achieve anything, so He “confounded” their language, so they could not understand each other’s speech, causing the project to fail.
I’ve seen this story interpreted to explain (mythologically) the origins of our many different languages, but what if disparate linguistic traditions aren’t actually the barriers to widespread human cooperation the story purports them to be? After all, technological advances in the United States spread just as quickly to France and Japan as they do to Australia and New Zealand. What if God scattered the cooperative energy of the people by disrupting their ability to coordinate through the language of money?
And I am not talking about the hassle of buying euros on the Forex exchange and getting them into my bank in Portugal (though in 2022, that is still way more cumbersome than it ought to be.) That countries have different, but convertible currencies doesn’t disable cooperation and progress. Something bigger would be required to disrupt the language of value (both inter and intra-nationally) at scale. The Tower of Babel then isn’t a parable of multi-national and multi-ethnic diversity — it’s about something else.
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In 1971, President Nixon took the United States off the Gold Standard. That meant that instead of US dollars, and other currencies pegged to them, being redeemable for gold, they were backed by nothing. Freed from the gold tether, the United States and other issuers of sovereign currencies could increase the money supply by fiat. Of course, one cannot increase the supply of food or energy by fiat — you need to produce those commodities through natural resources and work. The disconnect between the productive capacity of a people which has real-world constraints, and their government’s ability to increase the country’s currency without limit skews incentives. One earns currency by doing productive work, but the government also creates currency at a whim. At first, there’s a dilution of the workers’ wealth, i.e., theft from the productive class, but, perhaps nearly as insidious, people learn to angle for positions closer to the currency creation. Why waste time with actual labor for finite market share when you can get in with those who have access to the infinite?
Entire industries spring up around money creation and servicing the money creators. The best and brightest minds head for Wall Street (money creation) rather than productive enterprise (science, engineering.) The goods and services that would be demanded by a gold-backed, limited-supply currency still have some demand, but nations that can print also spend on things like wars (enriching war-profiteers), corporate bail-outs and subsidies for industries that money-printing enables to capture regulators and politicians. Consider we put a person on the moon in 1969, built the national highway system over several decades and had transatlantic flights at supersonic speeds via the Concorde in the 1970s. The 1968 movie 2001 Space Odyssey contemplated interplanetary travel by the turn of the century. Little did Stanley Kubrick know that we would barely advance on that front at all. On our tower to the heavens, so to speak, we scarcely laid another brick.
But technological advancement is not the only casualty of the Towel of Babel distorting money’s informational signal. Take a look at the site, WTF Happened In 1971, and check out its effect on wages, the cost of living, income inequality, currency crashes, hyperinflation episodes, US national debt and the number of administrators relative to physicians in the healthcare system. With the signal distorted, our society is chasing money rather than productivity. In doing so, our capacity to create real value (like a high-speed train from Los Angeles to San Francisco) is diminished, while we bounce from asset bubble to asset bubble, during a time of record inequality and economic hardship for increasing swaths of the population.
A hard-money standard whether gold, or the superior modern version, bitcoin, would reverse this trajectory by fixing the language of money and allowing people to invest their energy on creating value rather than chasing its easily-manipulated measurement.
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Coincidentally, between the time I drafted and published this piece, The Atlantic came out with an interesting article entitled The Tower Of Babel too, addressing the gulf in perceptions of reality between people of different political stripes. I think there’s merit to that case, but believe the lack of ascertainable shared reality is but a symptom of the larger problem, namely that the fundamental language of value is distorted.
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